[Ip-health] FT: Goldman unveils plans for pharma research funding

[Judit Rius Sanjuan]

http://www.ft.com/cms/s/0/e92f9d3c-c0db-11dd-b0a8-000077b07658.html?nclick_check=1

Goldman unveils plans for pharma research funding
By Andrew Jack
Published: December 3 2008

Goldman Sachs is in talks to provide hundreds of millions of dollars
of funding to a large pharmaceutical company, in the first evidence of
a new business model for the sector that will see financing shifted
away from funding companies and towards targeted co-development of
specific medicines.

Jon Symonds, managing director at the investment bank in London and
former finance director of AstraZeneca, the Anglo-Swedish
pharmaceutical group, said a first deal to create a new hybrid model
of research and development should be finalised early next year.

Speaking at the Financial Times Pharmaceuticals Conference, he said
that the deal - which will be with a large, unidentified drug
developer other than AstraZeneca - reflected the desire for even large
companies with strong sales on existing drugs to seek funding for
future development.

The move by Goldman reflects continuing and diversifying efforts to
raise new funds despite the deteriorating market conditions in recent
weeks.

It comes in response to the fast-rising costs and growing difficulties
of bringing innovative new drugs through regulatory approval into
healthcare systems, as existing medicines go off-patent and are
subject to fresh generic legal challenges and pressure on pricing.

Mr Symonds said the large pharma companies were "trapped in their
pipelines" by substantial commitments to costly late-stage clinical
trials, with only limited funds for earlier stage medicines.

"There is a genuine shortage of capital," he said.

However, their investors were reluctant to endorse new rounds of
capital raising, after disappointing returns from previous rounds of
research on experimental drugs that failed.

He said Goldman Sachs' model therefore involved a different approach,
creating a "research pool" into which pharma companies would place a
range of experimental drugs in a single therapeutic area in early-
stage phase 1 and 2 trials, where their specialists would work
alongside external experts including scientists, chemists and clinical
research organisations.

The action would help create more flexible, transparent and cheaper
drug development, freed from large bureaucracies and heavy overheads.
It would also share the high risks of new drug development with
outside partners.

He said the model would potentially allow competing pharma companies
working on similar drugs and duplicating research areas to all pool
resources in this way.

"If we deliver one, there is huge appetite because capital is in
pretty short supply," Mr Symonds said.

Copyright The Financial Times Limited 2008

Judit Rius Sanjuan
Attorney
Knowledge Ecology International / Essential Information
www.keionline.org / www.cptech.org
Phone: +1.202 332 267, ext 18